Every business has its ups and downs. What really matters is how down there are you? If your sales are decreasing at a fast rate, you begin losing customers or you are having trouble paying your vendors, then it is time you check what exactly is going wrong in your business. Failing a business doesn’t usually happen overnight; it’s often a slow but steady spiral down. Often, captured early enough, you can turn things around.
Although every single business is distinct from every other business, there are certain reasons that drive the failure of a business. Let’s take a look at what these are and how we can overcome these issues to make a successful and fast-growing business:
Why your business is failing and how you can avoid it:
- You don’t market your business enough: Not all business owners are born with the capability of marketing their business in the perfect way. If hiring someone means better marketing, then go for it. Don’t compromise on factors such as marketing, as it could essentially be the reason you will either end up with more or less customers. Marketing is more or less an investment in time, money or even both, and it is indeed an essential investment for your business. How else would your potential customers know about the existence of your business?The only real solution to do this is: START marketing. If money is what you are lacking, then take time to educate yourself about marketing and how it needs to be done. Teach yourself about social media. Social media is indeed one of the most powerful tools of our generation that shapes the way marketing works. If you can invest in marketing, then get quotes from marketing consultants or even freelancers to get the job done, quickly and efficiently. Some business owners say they don’t need a website. I’ll be blunt – in 99% of cases, this is rubbish. People need to find you, and will ‘look you up’ before they even choose to pick up the phone. No website, no presence, no credibility and often without a website, there is no (or little) option for a prospect to check you out.
- Your price may be too low: If you are doing a lot more work but are still unable to make ends meet, then it is time to re-evaluate your prices. Pricing your products shouldn’t be much of a hassle, it is, in fact, easier than pricing services as you are already aware of the price that you bought the products with, thus price can be easily determined based on your desired profit margin. Make sure your profit isn’t that scant so that it makes paying your bills difficult for you.So does that mean you should double the prices overnight? Well, of course not. What you do, however, is raise the bar for your new clients. If they stop coming back to you, you probably raised it too high. If you still receive sales, then you might even increase those rates even more. Minor (but regular) price increases are often needed and if you have a seasonal business, do this when you are busiest.
- Your costs are too high. When was the last time you reviewed your Profit & Loss statement and reviewed costs? To improve profit, 3 things can happen. You work more (and harder) to increase turnover. You increase your prices. You decrease your expenses. Now, one mistake greener business owners make in this third idea is that they just look at line items on their P&L statement and cut what they perceive they can. They can’t cut their electricity or telephone, but they can cut say marketing or staff training. Foolish choices. Consider instead improved efficiencies. Are staff working efficiently? Is your marketing being monitored to see what works (or doesn’t) and it’s being tweaked accordingly? Are you over servicing your clients and value-adding too much?
- Good record keeping is another reason businesses fail. Above, I said to look at your P&L statement but what if you don’t have your bookkeeping up to date? What if it’s not accurate? What if you don’t get reports until 3 or 4 months after the fact? Timely and accurate financial reports are critical to you being able to make relevant and accurate business decisions. Make getting your bookkeeping on track a high priority.
- A large factor of business failure is the owner’s knowledge. So often (especially new businesses) have owners who are good at what they do; they are great at it. However, are they great at every aspect of the business? I would suggest not; this is something you learn over years and decades. To me, you have 3 options here. Learn yourself. Employ someone else who has the skill. Get an experienced business coach. Each is a commitment of time and or money; however, business needs to be smart and competitive these days; simply working hard and praying is not enough.
- You can’t handle growth: You started off as a small business and did not expect to grow at a super-fast rate. Rapid growth isn’t always a, what they call, a blessing. If you can’t handle growth, you most definitely are risking the reputation of your brand and possibly much more.
So what exactly can be done about this? Rapid growth is indeed good for any business, but with this growth, you need to substantially increase the staff and train them, so that the traffic of your website can be handled efficiently. The faster you respond to your customers, the happier they will be and are more likely to return back to you. So make sure you make their experience worthwhile. Control the growth; maybe at times you need to say no to some things, or alternatively plan for your growth. Ensure you have the resources, space, technology, systems and staff training and expertise to handle the extra work and contracts as they come in.
Taking the above measures will help your business head towards the right direction. Start making changes now and this will impact your business positively. These changes will make your business a lot more productive and efficient.
